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YELLOWKNIFE, Northwest Territories & MISSOULA, Mont.--(BUSINESS WIRE)--Dominion Diamond Corporation (TSX: DDC, NYSE: DDC) (the “Company” or
“Dominion”) and The Washington Companies (“Washington”), a group of
privately held North American mining, industrial and transportation
businesses founded by industrialist and entrepreneur Dennis R.
Washington, today announced that they have entered into an arrangement
agreement (the “Arrangement Agreement”) under which an entity affiliated
with Washington will acquire all of Dominion’s outstanding common shares
for US$14.25 per share in cash or a total equity value of approximately
US$1.2 billion pursuant to a plan of arrangement (the “Arrangement”)
under the Canada Business Corporations Act. The transaction represents a
44 percent premium to Dominion’s unaffected share price of US$9.92 on
March 17, 2017. The transaction marks the result of Dominion's review of
strategic alternatives as previously announced on March 27, 2017.

The Board of Directors of Dominion (the “Board”), after consultation
with financial and legal advisors, and based on the recommendation of a
special committee of the Board consisting of four independent directors,
has unanimously determined that the Arrangement is in the best interests
of the Company, approved the Arrangement and recommends that Dominion’s
shareholders vote in favour of the Arrangement. All directors of the
Company have entered into support agreements to vote their common shares
in support of the Arrangement.

“Dominion Diamond has an excellent collection of mining assets and a
talented and experienced management team and workforce,” said Lawrence
R. Simkins, President of Washington. “We are excited to work with their
team to extend the mine life of the Ekati mine and continue partnering
with Rio Tinto in the operation of the Diavik mine, while maintaining
long-term employment for Dominion employees. The Washington Companies
has a long track record of building businesses throughout North America,
significant experience in mining as well as operating its investments in
Canada, and a decades-long investment horizon. We share a commitment to
providing long-term benefits to all Dominion stakeholders and to the
Northwest Territories and its local communities.”

“The Washington offer delivers compelling and immediate value to
Dominion shareholders at an attractive premium that recognizes the
intrinsic value of Dominion and provides shareholders certainty through
an all-cash offer,” said Jim Gowans, Chair of the Board of Dominion
Diamond Corporation. “This offer is the result of a robust strategic
review process and the Board unanimously agrees that this offer
represents the best option available to Dominion shareholders, and
recommends that shareholders vote in favour of this transaction.”

Added Gowans, “Dominion also believes this transaction is an excellent
outcome for the company’s stakeholders, including employees, community
members and the Northwest Territories. The transaction allows the
operation to take the next steps in mine development and ensures mining
and its associated benefits continue in the North for decades to come.”

“The Washington Companies’ commitments to safety, operational
excellence, innovation and world-class management teams position us
favourably for long-term success at the Ekati and Diavik mines for the
benefit of all Dominion Diamond stakeholders,” added Dennis Washington,
Founder of The Washington Companies. “I look forward to the next chapter
of continuing to build and support successful, safe business operations
in the Northwest Territories.”

Benefits to Canada

Washington will be a responsible, long-term operator and builder of
Dominion’s world-class assets, and plans to extend the mine life of
Ekati for decades, consistent with the current development plan.

As part of this acquisition, Washington plans to:

Operate Dominion as a standalone business as Washington does with its
other successful operating companies;

Appoint a new CEO based in Canada to the Dominion management team;

Keep Dominion’s headquarters in Canada and maintain a significantly
Canadian management team;

Deploy capital to develop both the Jay and Fox Deep projects;

Make new investments in a reinvigorated greenfield exploration program;

Maintain a high level of environmental stewardship through all phases
of its operations;

Maintain focus on the recruitment, training and employment of
Indigenous people;

Honour the existing commitments to the Indigenous communities to
ensure their interests are protected;

Continue with scholarship programs and heritage funds to assist with
social, recreational, and community development programs;

Provide ongoing support for local suppliers and contractors, including
Indigenous businesses; and

Continue to promote Dominion’s CanadaMark brand for its ethically
sourced and premium Canadian diamonds.

Arrangement Agreement

The Arrangement Agreement is subject to customary non-solicitation
provisions, including Dominion’s right to consider and accept superior
proposals. In the event of a superior proposal, Washington will have a
five business day right to match the superior proposal. If the
Arrangement is not completed as a result of a superior proposal, the
Company will be required to pay Washington a termination fee equal to
US$43.9 million (or approximately 3.75 percent of the equity value).

The closing of the Arrangement is subject to the approval of at least
two-thirds of the votes cast at a special meeting of Dominion
shareholders to be called to consider the Arrangement, the Company
having a minimum cash balance of US$150 million if closing is on or
before November 30, 2017, or US$200 million if closing is after November
30, 2017, and certain other customary closing conditions, including
court approval, approval from the Minister of Innovation under the
Investment Canada Act and the Commissioner of Competition under the
Competition Act, and the absence of any material adverse effect with
respect to the Company. In connection with the transaction, Dominion
will suspend the declaration and payment of dividends on Dominion’s
shares and has terminated its Normal Course Issuer Bid. The transaction
is expected to close in the fourth quarter of 2017.

To fund part of the consideration payable in connection with the
Arrangement, Washington has obtained fully committed debt financing led
by Credit Suisse with Citi, UBS Investment Bank and Natixis acting as
joint lead arrangers. The balance of the consideration will be funded
with an equity commitment from Washington and cash on Dominion’s balance
sheet.

Should Washington be unable to complete the Arrangement due to a funding
failure, or in other limited circumstances, Washington will be required
to pay the Company a reverse termination fee equal to US$70.2 million
(or approximately 6.0 percent of the equity value).

Washington is highly committed to strong environmental stewardship,
reclamation obligations and safety culture, as is Dominion. As part of
the transaction, the strong environmental bonding obligations of
Dominion will remain unchanged.

Further information regarding the transaction will be included in the
Company’s management information circular to be mailed to Dominion’s
shareholders in advance of the special meeting of Dominion shareholders,
which is expected to be held in September 2017, and in Dominion’s
material change report in respect of the announcement of the
transaction, each of which will be filed with the Canadian and U.S.
securities regulators and will be available on SEDAR at www.sedar.com
and EDGAR at www.sec.gov.

The Board has obtained a fairness opinion from each of TD Securities
Inc. and Morgan Stanley Canada Limited that, as of the date of the
opinions, and subject to the assumptions, limitations and qualifications
on which such opinions are based, the consideration to be received by
the Company’s shareholders pursuant to the Arrangement Agreement is
fair, from a financial point of view, to the Company’s shareholders.

TD Securities Inc. is acting as financial advisor to the Company,
Stikeman Elliott LLP is acting as legal advisor to the Company and
Kingsdale Advisors is acting as strategic advisor to the Company.

Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal advisor
to the Special Committee and the Board of Directors of the Company.
Morgan Stanley Canada Limited is acting as financial advisor to the
Special Committee of the Board, and has provided a fairness opinion to
the Board on a fixed fee basis.

Forward-Looking StatementsThis news release
includes forward-looking statements and information (collectively, the
“forward-looking statements”) including, but not limited to:
forward-looking statements pertaining to the purchase by Washington of
all the issued and outstanding common shares of Dominion; the expected
benefits of the transaction, including the expected benefits to
shareholders, customers, employees and other stakeholders as well as
future financial and operating results; the anticipated timing for the
special meeting of Dominion shareholders and closing of the transaction;
the satisfaction of closing conditions including, without limitation (i)
certain regulatory approvals; (ii) required Dominion shareholder
approval; (iii) necessary court approval in connection with the plan of
arrangement, (iv) certain termination rights available to the parties
under the Arrangement Agreement; and (v) other closing conditions,
including, without limitation, the operation and performance of the
Dominion business in the ordinary course until closing of the
transaction, maintenance by Dominion of a minimum cash balance in the
amounts as specified in the Arrangement Agreement, and compliance by
Dominion with various covenants contained in the Arrangement Agreement,
all of which are subject to risks, uncertainties and assumptions. As a
consequence, actual results in the future may differ materially from any
expectation, conclusion, forecast or projection in such forward-looking
statements. Therefore, forward-looking statements should be considered
carefully and undue reliance should not be placed on them. Examples of
statements that constitute forward-looking information may be identified
by words such as “believe”, “expect”, “project”, “should”, “anticipate”,
“could”, “target”, “forecast”, “intend”, “plan”, “outlook”, “see”,
“set”, “pending”, and other similar terms. All forward-looking
statements are made pursuant to the safe harbour provisions of
applicable Canadian securities legislation. Forward-looking statements
are subject to risks, uncertainties and assumptions including, but not
limited to: the potential risk that the transaction will not be approved
by Dominion shareholders; failure to, in a timely manner, or at all,
obtain the necessary regulatory and court approvals for the transaction
or any transaction ancillary thereto; failure of the parties to
otherwise satisfy the conditions to complete the transaction; the
possibility that the Board of Directors of Dominion could receive an
acquisition proposal and approve a superior proposal; the effect of the
announcement of the transaction on Dominion’s strategic relationships,
operating results and business generally; significant transaction costs
or unknown liabilities; the risk of litigation that would prevent or
hinder the completion of the transaction; and other customary risks
associated with transactions of this nature. In addition, if the
transaction is not completed, and Dominion continues as an independent
entity, there are risks that the announcement of the transaction and the
dedication of substantial resources of Dominion to the completion of the
transaction could have an adverse impact on Dominion’s business and
strategic relationships, operating results and business generally. As a
consequence, actual results in the future may differ materially from any
forward-looking statement, forecast or projection, whether expressed or
implied. Therefore, forward-looking statements should be considered
carefully and undue reliance should not be placed on them. Please note
that forward-looking statements in this news release reflect
Management’s expectations as of the date hereof, and thus are subject to
change thereafter. The Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
Factors that could cause anticipated opportunities and actual results to
differ materially include, but are not limited to, matters referred to
above and those matters identified in the Risks and Uncertainties
section and elsewhere in the Company's most recent annual MD&A and the
material change report that will be filed in respect of this
transaction, which are, or will be, available on the Company's website
at www.ddcorp.ca
and on SEDAR at www.sedar.com
and EDGAR at www.sec.gov.

About Dominion Diamond CorporationDominion
Diamond Corporation is a Canadian mining company and one of the world’s
largest producers and suppliers of premium rough diamond assortments to
the global market. The Company operates the Ekati Diamond Mine, in which
it owns a controlling interest, and owns 40% of the Diavik Diamond Mine,
both of which are located in the low political risk environment of the
Northwest Territories in Canada. It also has world-class sorting and
selling operations in Canada, Belgium and India.

About The Washington CompaniesThe Washington
Companies, founded by industrialist and entrepreneur Dennis R.
Washington, are privately held companies active in the core industries
of mining, rail and marine transportation, aviation, environmental
remediation and restoration services, and heavy equipment sales and
service. The companies are headquartered throughout Montana, the Pacific
Northwest and western Canada and conduct business internationally.